Brazilian Rate Futures Reverse Early Jump After Bolsonaro Letter as FX Auction Steadies Market

A US$2 billion FX line auction by the central bank helped calm markets into the close.

Overview

Contracts opened higher as traders reacted to Jair Bolsonaro’s letter endorsing Flávio Bolsonaro’s pre-candidacy, denting hopes for a Tarcísio de Freitas bid favored by investors.
Rates later fell in thin year-end trading, with DI Jan 2027 closing at 13.73%, DI Jan 2029 at 13.22%, and DI Jan 2031 at 13.53%.
The DI Jan 2027 contract hit an intraday high near 13.90% before retreating with the improvement in market tone.
Banco Central sold US$2 billion in FX lines in full, lifting its available stock to US$14.75 billion and contributing to the late-session easing.
A Paraná Pesquisas poll showed President Lula in a technical tie with several rivals, reinforcing the market’s focus on electoral risk and the outlook for fiscal reform.